As it was made without notes, we must rely on our contemporaneous record. Any errors are ours, not Mr Rainey’s.

He began by making the point that the law is there to be a useful tool: “user-friendly and accessible. It should work.”

He referred to the book, The Fall of the Priests and the Rise of the Lawyers, by lawyer-historian Philip Wood, that was published earlier this year to favourable reviews.

“It does have this very important point: reform is a duty. Laws that are badly framed or badly executed can have devastating consequences on people’s lives and can cripple whole societies …

“Unfortunately, I don’t think I can defend the law of landlord and tenant in this country. It is very badly in need of reform and nothing really has been done to it since 2002 …

“We do have to stand back and ask why do we have it? Is it a means to an end, because we have not got a better system? Or, are we trying to create an asset class?”

Mr Rainey pointed that “there is obviously value in leasehold properties that is not in the hands of the tenants” and asked: “Why is that?

“Does there have to be a landlord value in a block of flats at all?

He asked whether we can be bold in reforming the law: “Yes, we can be bold, but we’re not very good at it in England. But the UK is more than just England.

“In Scotland they have introduced radical reform. They had feudal tenure of until very recently with crofting and so on, but in many cases the old law has been abolished.

“The assembly in Wales has been very active in changing the way that residential tenancies are governed. They now have different forms of tenure across the border in Wales.

“If we can have an Out of Space Act 1986 which regulates the moon and other celestial bodies … If you can deal with that, why, on earth, can’t we sort out blocks of flats?”

He addressed the failure of the commonhold, that was “supposed to be the biggest land reform since 1925”.

“But there are fewer commonhold flats than there are unsold copies of books about commonhold that were written in 2002.

“This should not be a cause for despondency. Everybody thinks we got it completely wrong, and people say ‘Look at Australia, which is just fantastic as everyone has strata title. And it works wonderfully. If only we could manage it as well.’

“This is grossly unfair. Strata title has required repeated amendment.

“The difference is that they didn’t get it right first time, but they kept going at it. We didn’t get it right first time, and everything has just stopped.

“We need to do one of two things to fix it and to encourage it, or we need to get rid of it altogether.

“This is an important point not to get overlooked, because it is like a clock in the statutory machinery.

“It causes problems. In 1984 there was a Law Commission report on land obligations on easements, rights of way and restrictions on use of land. This was not enacted upon by Parliament because it was going to change mixed-use sites such as flats with commonhold.

“In 2011 another Law Commission report concerned land obligations. This time the report said we are not going to deal with covenants in respect of flats and so on because we have commonhold. That is all very well. And it is true that we do have commonhold. But it does not actually exist.

“The fact that there is this dead statute in the middle is holding up the reform of the law.”

What should we do if we were going to do something?

“Consistency in policy is something to think about. A lot of the problems we have is that people go in different directions, or things get started by different people at different times for different purposes without looking at the bigger picture.”

Mr Rainey referred to the Leasehold Reform, Housing and Urban Development Act 1993 giving the right to a new 90-year lease with a peppercorn ground rent.

“But if that’s the policy that applies to all flats on long leases, why is it lawful to create new ground rents in the first place?

“I suggest that in due course the tenants have to pay to buy them out. And this goes back to the idea of: are we creating an asset class, or are we trying to make a law for homes for people to live in?

“Why is it lawful to have ground rents in leases, but not in freeholds or commonholds?

“There used to be a rent reserved on a freehold because you could have a rent charge. They were very popular up to 1977 when they were discontinued.

“You could sell a freehold and reserve yourself the rent but you cannot do this now. But if rent charge was abolished in 1977, what about leases?

“What about the lease itself a wasting asset which investors from overseas do not appreciate. They do not always understand that there is a big difference between buying a 60 year lease or a 160 year lease. If we are going to have leases, should they be indeterminate in length?

“The law currently says that you cannot have an indeterminate length of lease.”

Mr Rainey referred to the “little industry of extending leases which is good for surveyors but not so good for leaseholders”.

He then introduced another thought:

“New leases are often sold on 999 years. But the buildings won’t last that long. They probably won’t actually last 99 years, frankly.

“Are we bequeathing a future redevelopment problem for future generations?

“Vast tracks of metropolitan areas in London and Manchester have been built under 999-year leases with no redevelopment break. How are we going to redevelop are cities in 100 years time?

“Singapore has a law addressing this which has the effect where you can collapse leases if there is a statutory over-ride.”

Then he came to enfranchisement:

“Enfranchisement should be overhauled completely, even though it makes me a very good living.

“It is too complicated; it is full of traps for the unwary.”

Mr Rainey suggested the 1967 Act was broken.

“It is a statute that defines a house as “a house reasonably so called” – ie it is a house if you think it’s reasonable to call it a house. We should be able to do better than that.”

Consolidating the legislation would be a good idea.

“A single procedure for all these different kind of rights that we’ve got for houses, flats, collective enfranchisement, right to manage. These are all different Acts and different procedures, with slightly different tribunals. Bring them all together and make them all into one Act.”

He addressed right to manage.

“Right to manage, which is close to the hearts of many people, came in with the 2002 Act. I would suggest that the time has not been kind to right to manage. There is a lot of it, but the more there is the more holes are appearing.

“I was responsible for what many people consider was a dreadful decision in the Triplerose case [which stuffed applications for multi-block RTM], but you can’t get right to manage over multiple blocks.

“Not the court’s fault; not my fault.”

Then there are the problems around embedded management companies.

“These are seemingly a good idea: leaseholder control. But once you have embedded the management company into the lease there is no statutory framework for changing control of it.

“I have seen cases were the original management company has folded and there is no means to replace it.

“There is a fabulous case where some genius decided ‘Let’s just incorporate a new company with the same name. No one will notice.’

“And to be fair, for a very long time nobody did notice. But eventually they did, and that company had no right to manage this block or to raise service charges

The right of first refusal to buy the freehold should be abolished.

“The right of first refusal is something we could get rid of. It sounds great, but you don’t really need it now because it was brought in in 1987 when you didn’t have collective enfranchisement.

“It is badly drafted; it discourages mixed-use development, which we all want. Wary landlords avoid it; unwary ones get trapped by it.”

Contact LKP

The leasehold game is weighted against ordinary home-owning leaseholders, who aren’t professional players. LKP was set up to redress the balance, to help you win your disputes or at least avoid disasters.

If you have a leasehold problem, you can email sok@leaseholdknowledge or take a chance on calling 07808 328 230.

Comments

What is happening in the currently legalised exploitation by piranha style corporates of the most basis of human instincts, which is simply to provide a safe haven home for ones family. It is a blatantly immoral symptom of the economic control of a housing industry by private owners for profit rather than by the state- but where the State now has a duty to intervene.

I applaud Campaign against retirement leasehold exploitation for its work and dedication and urge everyone who is concerned about the impact of the housing crisis to offer their full support.

As Admin points out above, in his address to the ARMA conference, Philip Rainey QC “…did nothing less than urge the whole-scale reform of landlord and tenant law…”And in a wide ranging sweep of the need for such reform, he highlights those areas the Law Commission and policy makers should now address..

As horror stories continue to reverberate through this unregulated industry, within which a motley band of spivs, villains, and gangsters have formed their own “hole in the wall” gang, reform is not just “a duty”, it is urgently required to end the degenerate system that enables the unscrupulous wary to literally steal the assets of the gullible and vulnerable unwary from underfoot.

My main concern is that of “Right of First Refusal”.

Philip Rainey states: “The right of first refusal is something we could get rid of, it sounds great, but you don’t really need it now because it was brought in in 1987 when you didn’t have collective enfranchisement.”

Unfortunately, Philip Rainey’s proposals for reform would be of little assistance to existing long leaseholds.in premises constructed during the 1970/80/90s.

There is a widespread criminal racket taking place, which involves the buying up of Ground Rent portfolios of such premises, without the prior knowledge of qualifying long leaseholders, in breach of s4 of the LTA 1987 [amended b y HA 1996].

It involves a highly lucrative trade for the unscrupulous few who wantonly and criminally breach the first refusal rights of qualifying leaseholders.

With the majority of individual flats in such premises commencing on 99 year leases, and the number of years remaining nearing or already under 80 years.,the unwitting flat owner will soon require to extend the lease, but ends up falling into the hands of the “hard men” and the sordid business of “informal” lease extensions.

There are 10’s of 1,000’s of such properties that have already fallen into this criminal trap, and this trade continues unabated.

Such sales take place for what I would call a “relative peppercorn”. The seller aims to offload the title quickly to an unrelated buyer, and does so through manipulation of the sale and purchase agreements deliberately set up to conceal the sale from qualifying leaseholders [no section 5 here!]

Note: this pernicious trade is wholly separate from any recognised avoidance route.

Two examples:

[a] c. 1,100 long leaseholds sold for £1.1 m. [b] c.850 long leaseholds sold for £1.7 mi

According to LTA 1987, qualifying leaseholders can force re-sale through the Courts “on like terms” to the original disposal, thereby obtaining the freehold on like terms to the original disposal. This right continues, including onto any subsequent purchaser.

However, at present, enforcement of leaseholder rights can only be obtained through the Courts at disproportionate cost and remains open to widespread abuse and gamesmanship by the same set involved in the original disposal in the first place.

As an illegal purchaser obtains a portfolio at c. £1,000 per flat[Exp1] or c. £2,000[Exp2], this opens up the follow-on and consequently illegal trade in “informal” lease extensions with sums demanded in excess of £10,000 per unit [e.g. under 80yrs-2 bed flat c. £120,000] and redrafted Ground Rent to incl.. RPI etc. .

The sale and purchase of Ground Rent portfolios as outlined above is a major national criminal scandal. which deprives unwitting qualifying leaseholders of the material interest in their own leasehold properties, and places them at the mercy of unscrupulous spivs and gangsters.

The Law Commission must now ensure enforcement of existing legislation and seek introduction of more punitive penalties to protect existing long leaseholders from having their property purloined in this way.

And responsibility to order re-sale on like terms to the original disposal should be transferred away from the Courts and brought under the remit of the First Tier Tribunal -Property.

You are clearly very much on top of your brief. I think your description of “A major criminal scandal ” re purchase of Ground Rent Portofolo purchase is spot on. Tree view Trading Ltd and its sister company Westbury Residential Ltd ( formerly the disgraced County Estate Management company) are are big player in this game. Their record is terribly poor and they have had numerous LVT judgements against them, including receiver managers being appointed because of their abject neglect as Freeholder/ Managing Agent, yet, they buy up Freehold titles like they are candy sticks and bully leaseholders who adhere to the lease, but refuse to stuff their mouth with gold.. These spivs need to be brought to book.

It is high time that strict regulation is forced upon unscrupulous Managing Agents. It should be made a criminal offence for agents and their friendly solicitors to harass leaseholders for monies that are not due. If they believe they have a case they should issue court proceedings but that they MUST NOT chase / harass or threaten leaseholders with forfeiture or any thing else for that matter! , I was very interested in the ‘Forfeiture’ discussion oct 2016. Unscrupulous agents use that threat at the first opportunity and not as the ‘Nuclear ‘ option. I have been a victim on this gangster approcach for 2yrs. I of course told the agent and her solicitor to put up or shut. I am still waiting for them to put up……I am considering reporting the solicitor to the relevant authoritiy which I believe is the SRA. Important FTT correspondence was sent to an out of use address despite my correct details being on record. I note that this was mentioned by a fellow commentator on the ‘ Forfeiture’ discussion , as being “A naughty game” certain agents and their lawyers play. Presumably to keep the ‘ nuisance ‘ leaseholder on the back foot. These Spiv like bullies have got to be taught a lesson and I am going to support LKP and others in any way I can to DRAIN THE SWAMP , as a fellow commentator so eloquently stated.

It is high time that strict regulation is forced upon unscrupulous Managing Agents. It should be made a criminal offence for agents and their friendly solicitors to harass leaseholders for monies that are not due. If they believe they have a case they should issue court proceedings but they MUST NOT chase / harass or threaten leaseholders with forfeiture or any thing else for that matter! , I was very interested in the ‘Forfeiture’ discussion oct 2016. Unscrupulous agents use forfeiture as a threat at the first opportunity,one can only assume they do this to bully and frighten the leaseholder. I have been a victim of this gangster approcach for 2yrs.whereby the agent is chasing me for monies that are not due, and in doing so are themselves in breach of the s20 Legislation brought in to prevent leaseholders from being ripped off. . I of course told the agent and her solicitor to put up or shut. I am still waiting for them to put up……I am considering reporting the solicitor to the relevant authoritiy which I believe is the SRA. Important FTT correspondence concerning our lease was sent to an out of use address despite my correct details being on record. ( I believe this was done consciously) I note that this was mentioned by a fellow commentator on the ‘ Forfeiture’ discussion , as being “A naughty game” certain agents and their lawyers play. Presumably to keep the ‘ nuisance ‘ leaseholder on the back foot. These Spiv like bullies have got to be taught a lesson and I am going to support LKP and others in any way I can to DRAIN THE SWAMP , as a fellow commentator so eloquently stated.

Ground rent scandal

And sector offers up yet another ‘code of practice’, this time for freeholders (whoever they may be when hidden offshore) One of the greatest fictions of the leasehold sector is that freeholders – even anonymous offshore ones – are the only reliable long-term stewards of a block of flats. The leasehold owners would be incapable, […]

By Sebastian O’Kelly On Monday, MPs of the Communities Select Committee at last flushed out the developers and ground rent speculators who profit from turning ordinary families’ homes into long term investment assets. A murky sector that habitually hides behinds the courts, lawyers, lobbyists and trade bodies finally had to justify its practices and, indeed, […]

It is reported in the Liverpool Echo that solicitor Liam McEleavey, of Gabriel Solicitors, has been jailed for three years three months for stealing £280,000. A solicitor in Gabriel Solicitors, a firm of Taylor Wimpey recommended solicitors – which, needless to say, failed to alert purchasers of predatory terms in the leases – has been […]

The new chief executive of McCarthy and Stone John Tonkiss is delighted the government has caved in over retirement housing ground rents, while announcing strategic changes that were prompted by the prospect of this reform. The company argued strongly in favour of ground rents because it was disadvantaged by having to provide communal areas at […]

Corbynite Labour MP Kate Osamor, who asked a series of parliamentary questions on behalf of residential freehold fund Long Harbour, has barred a prominent leasehold activist from her Twitter feed. Baz Jafar, a doubling ground rent leaseholder, found he was blocked from his Edmonton MP’s official Twitter feed yesterday after raising the issue of the […]

October 14 2018 This week we should have been able to announce three very positive proposals for supporting leaseholders. This followed on from the excellent work by Secretary of State Sajid Javid and his radical commitment that the government had finally agreed to a “crackdown on unfair leasehold practices”. Unfortunately, Sajid Javid was promoted […]

Labour frontbencher Kate Osamor asking a series of parliamentary questions on behalf of ground rent speculators lifts the lid on lobbying for the sector. Miss Osamor, the shadow international development secretary, submitted six questions drafted by lobbyists Pagefield acting for the £1.6 billion Long Harbour fund, the Daily Telegraph has claimed. LKP has contacted Labour’s […]

MPs turned out in force this morning to meet leasehold demonstrators organised by the National Leasehold Campaign, most of who arrived by coach from the North West. Sir Peter Bottomley and Jim Fitzpatrick, patrons of LKP and co-chairs of the APPG on leasehold reform, were on hand, as was Justin Madders, the deputy chair who […]

By Sebastian OKelly, LKP trustee The controversial issues of ground rents and exit fees in retirement housing were discussed at this week’s meeting of the All Party Parliamentary Group on leasehold and commonhold reform. These were the main event in a meeting which also had an insider’s examination of leasehold insurance commissions, and why developers […]

… What I want what was promised: my freehold for £5,000 Freehold owners are desperate to nobble the ground rent capitalisation rate before reforms By Joanne Darbyshire Speech at APPG on July 11 2018 Jo was also on BBC R4 You and Yours yesterday, which can be heard here at 35 mins in: Treatments for […]

Yet another example of cronyism at work as 130 Persimmon staff share out a £300 million bonus thanks to spreading leasehold houses around the country. The company’s hilariously mis-named “long-term incentive plan” – short-term fill-yer-boots, would be more accurate – has already seen CEO Jeffrey Fairburn being awarded a £112 million bonus. The company’s regional […]

As government – and the Law Commission – reel from a barrage of special pleading by housebuilders over the government’s proposals to set ground rents as low as zero, their lobbying efforts were considered in London’s Evening Standard yesterday. It featured contributions from the soon-to-be-let-go CEO of McCarthy and Stone Clive Fenton and Spencer McCarthy, […]

Brilliant interview with outgoing McCarthy and Stone CEO Clive Fenton ‘Problem’ that retirement housebuilders have not been spoonfed profits, like others through Help To Buy Anyway, aren’t retirement housebuilders insignificant given the numbers of pensioners who are downsizing today, asks BBC? Radio 4’s MoneyBox quizzed retirement housebuilders McCarthy and Stone and Churchill Retirement Living on […]

Changing doubling ground rents to RPI allows a quick sale or enfranchisement but loads the freehold with revenues My 250-year lease with doubling ground rents add up to £1.9 million, but RPI ones add up to £25 million! Communities Select Committee needs to haul in the housebuilders By Joanne Darbyshire I bought my home from […]

The Conveyancing Association claims that 98% of sales of properties with onerous or doubling ground rents broke consumer protection rules. Only 2% of purchasers received information prior to viewing a property, according to a survey carried out with the help of the National Leasehold Campaign and the Home Owners’ Alliance. The Conveyancing Association has reported […]

Gleeson, the housebuilder that publicly disapproved of rip-off leasehold houses, was identified in the Commons on Tuesday for introducing a raft of “fleasehold” covenants into its freehold ones. Justin Madders, Labour MP for Ellesmere Port and Neston, who is deputy chair of the APPG on leasehold reform, spoke out about how “rancid the whole business” […]

… And they should include homeowners trapped in re-sales, too Housing minister Heather Wheeler has declared that housebuilders schemes to the doubling ground rent scandal – which has made 100,000 properties unsellable – “must go further and faster”. Buyers of second hand properties need to be included, and the housebuilders’ ex-customers need to be “proactively […]

… And we’re not going to do anything, either Eye-watering doubling ground rents at Redrow’s prime City tower block Crawford Building have been bluntly brushed aside as a concern by the developer that has profited from them. A leaseholder has contacted Sir Peter Bottomley and Labour MP for Bethnal Green & Bow Rushanara Ali stating […]

‘Not brilliant entrepreneurialism and wealth creation to leg over a 79-year-old pensioner’ – LKP The case of Trevor Nowell, 79, the former head teacher, 79, who paid £38,000 to buy the freehold on his £320,000 Taylor Wimpey house was published in the Telegraph yesterday. ‘Our freehold cost £38,000 – now we’re being denied compensation’ Leaseholders […]